The U.S. economy faced a setback in the first quarter of 2025, contracting by 0.3 percent on an annualized basis, as reported by the Commerce Department. This figure fell short of economists’ expectations, who had predicted a growth of 0.4 percent for the same period.
Several factors contributed to this unexpected decline. Uncertainty surrounding tariffs and a drop in government spending, which accounts for about 23 percent of the U.S. GDP, played significant roles. Additionally, consumer spending growth slowed to just 1.8 percent, a notable decrease from the 4 percent growth seen in the previous quarter.
Analysts highlighted that a sharp decline in net exports significantly impacted the GDP. This decline was not due to a decrease in U.S. exports but rather a surge in imports. Businesses and consumers rushed to purchase imports ahead of anticipated tariff increases, which distorted the overall economic picture. Shannon Grein, an economist at Wells Fargo, noted that the drop in GDP may exaggerate the weakness of the economy, as much of it was driven by this tariff-related behavior.
In response to the economic news, former President Donald Trump took to social media to place blame on President Joe Biden. On his Truth Social account, Trump remarked, “This is Biden’s Stock Market, not Trump’s… Our Country will boom, but we have to get rid of the Biden ‘Overhang.’ This will take a while, has NOTHING TO DO WITH TARIFFS.”
The current economic climate raises concerns about future growth as uncertainty looms over trade policies and government spending. With consumer confidence wavering, many are left wondering how these factors will shape the economy in the coming months.